Special Message of the Presidentof the 
United States on the President's 
inquiry intoEoonomy and Efficiency. 1911. 




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SPECIAL MESSAGE 

o/ THE PRESIDENT Q/ 
THE UNITED STATES 



Transmitted to the 
Two Houses of Congress 
March 3, 191 1 



ON 



The President's In- 
quiry into Economy 
and Efficiency : : : 



WASHINGTON : : GOVERNMENT PRINTING OFFICE : : 1911 



SPECIAL MESSAGE 

OF THE 

PRESIDENT OF THE 
UNITED STATES 

ON 

THE PRESIDENT'S INQUIRY INTO 
ECONOMY AND EFFICIENCY 




WASHINGTON 

GOVERNMENT PRINTING OFFICE 

1911 



SPECIAL MESSAGE. 



To the Senate and House of Representatives : 

I ask that you include in the sundry civil bill an appropria- 
tion for $75,000 and a reappropriation of the unexpended 
balance of the existing appropriation to enable me to continue 
my investigation, by members of the departments and by ex- 
perts, of the business methods now employed by the Govern- 
ment with a view to securing greater economy and efficiency 
in the dispatch of Government business. 

The chief difficulty in securing economy and reform is the 
lack of accurate information as to what the money of the Gov- 
ernment is now spent for. Take the combined statement of 
the receipts and disbursements of the Government for the 
fiscal year ended June 30, 1910 — a report required by law and 
the only one purporting to give an analytical separation of the 
expenditures of the Government. This shows that the ex- 
penditures for salaries for the year 1910 were 132 millions out 
of 950 millions. As a matter of fact, the expenditures for per- 
sonal services during that year were more nearly 400 millions, 
as we have just learned by the inquiry now in progress under 
the authority given me by the last Congress. 

The only balance sheet provided to the administrator or 
to the legislator as a basis for judgment is one which leaves 
out of consideration all assets other than cash, and all liabili- 
ties other than warrants outstanding, a part of the trust lia- 
bilities and the public debt. In the liabilities no mention is 
made of about $70,000,000 special and trust funds so held. No 
mention is made of outstanding contracts and orders issued as 
encumbrances on appropriations; of invoices which have not 
been vouchered; of vouchers which have not been audited. It 
is, therefore, impossible for the administrator to have in mind 
the maturing obligations to meet which cash must be provided. 
There is no means for determining the relation of current 
surplus or deficit. No operation account is kept, and no state- 
ment of operations is rendered showing the expenses in- 
curred — the actual cost of doing business — on the one side, 

3 



4 ECONOMY AND EFFICIENCY. 

and the revenues accrued, on the other. There are no records 
showing the cost of land, structures, equipment, or the balance 
of stores on hand available for future use; there is no informa- 
tion coming regularly to the administrative head of the Gov- 
ernment or his advisers advising them as to whether sinking- 
fund requirements have been met, or of the condition of trust 
funds or special funds. 

It has been urged that such information as is above indicated 
could not be obtained for the reason that the accounts were on 
a cash basis; that they provide for reports of receipts and dis- 
bursements only. But even the accounts and reports of receipts 
and disbursements are on a basis which makes a true state- 
ment of facts impossible. For example, all of the trust receipts 
and disbursements of the Government, other than those relat- 
ing to currency trusts, are reported as "ordinary receipts and 
disbursements"; the daily as well as the monthly and annual 
statements of disbursements are mainly made up from ad- 
vances to disbursing officers — that is to say, when cash is trans- 
ferred from one officer to another it is considered as spent, and 
the disbursement accounts and reports of the Government so 
show them. The only other accounts of expenditures on the 
books of the Trcasuiy are based on audited settlements, most 
of which are months in arrears of actual transactions. As be- 
tween the record of cash advanced to disbursing officers and the 
accounts showing audited vouchers, there is a current differ- 
ence of from four hundred millions to seven hundred millions 
of dollars, representing vouchers which have not been audited 
and settled. 

Without going into greater detail, the conditions under which 
legislators and administrators, both past and present, have been 
working may be summarized as follows: There have been no 
adequate means provided whereby either the President or his 
advisers may act with intelligence on current business before 
them; there has been no means for getting prompt, accurate, 
and correct information as to results obtained; estimates of 
departmental needs have not been the subject of thorough 
analysis and review before submission; budgets of receipts and 
disbursements have been prepared and presented for the con- 
sideration of Congress in an unscientific and unsystematic 
manner; appropriation bills have been without uniformit^'^ or 
common principle governing them ; there have been practically 
no accounts showing what the Government owns and only a 
partial representation of what it owes; appropriations have 
been overencumbered without the facts being known; officers 
of Government have had no regular or systematic method 



ECONOMY AND EFFICIENCY. 5 

of having brought to their attention the costs of governmen- 
tal administration, operation, and maintenance, and there- 
fore could not judge as to the economy or waste; there has 
been inadequate means whereby those who served with fidelity 
and efficiency might make a record of accomplishment and be 
distinguished from those who were inefficient and wasteful; 
functions and establishments have been duplicated, even mul- 
tiplied, causing conflict and unnecessary expense; lack of full 
information has made intelligent direction impossible and 
cooperation between different branches of the service difhcult. 

I am bringing to your attention this statement of the present 
lack of facility for obtaining prompt, complete, and accurate 
information, in order that Congress may be advised of the 
conditions which the President's inquiry into economy and 
efficiency has found and which the administration is seeking 
to remedy. Investigations of administrative departments by 
Congress have been many, each with the same result. All the 
conditions above set forth have been repeatedly pointed out. 
Some benefits have accrued by centering public attention on 
defects in organization, method, and procedure, but, generally 
speaking, however salutary the influence of legislative inquiries 
(and they should at all times be welcome), the installation and 
execution of methods and procedure which will place a pre- 
mium on economy and efficiency and a discount on inefficiency 
and waste must be carefully worked out and introduced by 
those responsible for the details of administration. 

It was with this strong conviction, based on years of obser- 
vation in public service, as well as on analogy found in cor- 
porate practice, that 1 asked Congress a year ago for an ap- 
propriation of $100,000 to pay the expenses of an inquiry into 
the methods of transacting public business, with a view to 
" inaugurating new or changing old methods so as to attain 
greater economy and efficiency." First of all, this inquiry has 
sought to know what is the problem before each administrative 
head, i. e., what are the powers, duties, and limitations imposed 
on each officer; what is the organization and equipment by 
means of which these powers and duties are executed or made 
effective; what are the methods and procedure employed; what 
records are kept; what reports have been made. These in- 
quiries have been made and the results have been indexed and 
tabulated and made available to the several departmental 
committees. In the progress of the work the estimates for 
1912 have been brought together on a uniform basis; expendi- 
tures have been reclassified and the objects of expenditure have 
been codified; uniform forms of expenditure documents have 



b ECONOMY AND EFFICIENCY. 

been devised and are now being considered for installation; 
the auditing organization and procedure are under discussion; 
new forms of expenditure, accounting, and reporting are being 
critically reviewed to the end that a common method and 
procedure may be introduced throughout the service. A gen- 
eral constructive program has been mapped out. 

The appropriations asked for will enable the President, as 
tlie responsible head of the administration, to provide the 
means for effectively undertaking the revision of administra- 
tive methods and accounts, so far as lie in his powers, without 
legislative action. The amount asked for was small, because 
it was expected that as soon as a well-supported plan was 
developed a \ery large number of highly competent technical 
men might be found in the service who might be brought into 
cooperative relation to make the work of revision one of 
evolution and permanent benefit to the Government. The 
cooperation and the high character of service obtained among 
regular employees has even surpassed my hopes. 

Predictions and forecasts of economj'^ are relatively easy to 
make but are seldom of value. It must be admitted, however, 
by all that under such circumstances as have prevailed in the 
past any well-directed and well-sustained effort which will 
cause each branch of the service to cooperate in a program of 
economj'^ and efficiency will each year produce results that will 
mean many times more than the cost. If inquiry is accom- 
panied by constructive effort which aims toward uniformity of 
practice, systematic handling of the business will come in- 
evitabl}" as a result of greater intelligence of administrative 
direction and control. 

I strongly urge, therefore, that Congress provide the neces- 
sary funds to carry on this important work. I urge this, not 
only that the President may have before him the information 
necessary to the "intelligent exercise of his present powers, but 
that he may also lay before Congress such recommendations 
as may be deemed necessarj-^ to make a well-considered con- 
structive program effective. 

Wm. H. Taft. 

The White House, March 3, 1911. 

O 



